carsales.com (ASX:CAR) to acquire remaining 51% of Trader Interactive

3 min read | June 27, 2022 03:07 PM AEST | By Sonal Goyal

Image source: © Transversospinales | Megapixl.com

Highlights

Trader Interactive is a leading platform of branded marketplaces in the US.

Carsales.com will be acquiring the remaining 51% interest in the Trader Interactive in a US$809 million deal.

Carsales.com will be raising AU$1.2 billion to fund the transaction.

Shares of carsales have been put to halt till 29 June 2022.

Australian online automotive advertising company, carsales.com Limited (ASX:CAR) shared today that it has exercised its call option to buy 51% remaining interest in the US digital marketplace business – Trader Interactive. In addition to this, on Monday (27 June), the company launched an AU$1,207 million equity raise to fund the transaction.

Trading of carsales.com stock was put on a trading halt before the release of the acquisition and equity raise announcement. carsales.com shares last traded at AU$20.760 per share.

Acquisition of Trader Interactive

Trader Interactive offers digital marketing solutions and services across the equipment, commercial truck, powersports and recreational vehicle industries. The company has delivered double-digit earnings growth and revenue over the last five years. Also, the estimated annualised revenue for the fourth quarter of 2022 is US$151 million, and the estimated adjusted EBITDA is US$89 million.

As per the ASX-announcement, carsales will acquire Trader Interactive for US$809 million. The transaction is to be funded by the equity raise.

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Details of the equity raise

Image source: © Jcjgphotography | Megapixl.com

carsales has announced a fully underwritten entitlement offer, in which the eligible shareholders can subscribe to one new share of carsales for 4.16 shares held as of 29 June 2022 (at 7:00 PM Melbourne time). Around 68 million new ordinary shares will be issued under this entitlement offer.

If the institutional entitlements are not taken up, then the ineligible institutional shareholders can participate at an offer price. The offer price of the entitlement offer will be AU$17.75, representing a 14.5% discount on the last closing price of AU$20.76 apiece.

The new shares issued under the entitlement offer will be eligible to receive the final dividend.

Reportedly, the shares of carsales will commence trading on 29 June, after the completion of the Institutional Entitlement Offer.

Do read: Carsales (ASX:CAR) hikes dividend after 20% rise in first half profit update

Why is carsales buying Trader Interactive?

carsales said Trader Interactive aligns with the company’s existing operational and international growth opportunities. By getting 100% ownership of Trader Interactive, the company expects to unlock considerable growth opportunities.

In a statement, the company said it would focus on executing long-term technology and product strategy for the Trader Interactive business.

Worth mentioning here is that the acquisition is subject to many conditions, such as gaining regulatory approvals and executing the securities purchase agreement.

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